Psst. I’ve got a tip for ya: Apple’s going down. Yep, the iPhone maker is set to become a tech dinosaur about a year from now, according to one analyst. I’d blame the whole thing on Hurricane Sandy, but the analyst opinion was released last week, just after Apple announced lower-than-expected profit margins. “Apple’s time to turn from tech titan into a dinosaur will come, but we still think that we are at least a year away”, Berenberg Bank analyst Adnaan Ahmad recently told investors, according to Daring Fireball and cited by Fortune…
What prompted this dire prediction? Well, according to Fortune it all began with Apple announcing last week that it expected a 36 percent gross margin in the first quarter of fiscal 2013. Putting a bow on it all is Ahmad’s belief that once Apple signs a deal with China Mobile (likely halfway through next year) the gravy train is over for the Cupertino, California company.
According to the analyst, consumers in their late teens are a big market for the iPhone. While Samsung smartphones have an average selling price of $150, the iPhone is $636 – unless you want an Apple handset that’s a year or two old.
“So for Apple to gain wider share of the smartphone market, it will need to offer ‘customised’ products at lower price points“, writes the analyst. In other words, a prepaid iPhone.
What happens if Apple opts to continue on its merry way?
“If Apple decides not to have customized lower-end iPhones, then growth will well and truly tap out once the China Mobile deal is signed”, he writes. Ahmad believes dealing with shrinking growth will be Apple’s largest worry, unless Samsung decides to spark a price war.
The need for Apple to provide a low-cost option is not new. The high cost of ownership has already cost Apple market share in emerging markets like India, where the iPhone 5 arrives this Friday.
Neither is concern that Apple may out-price the teen market – particularly if it discontinues the iPod touch, as has been reported. What’s new is that there is a now a line in the sand: a 2013 China Mobile deal.
As the author writes, Berenberg Bank has a historical perspective on its side, operating since 1590. However, the analyst exhibits a bit of bipolar financial wisdom. Ahmad answers the question of which Apple suppliers he would recommend: none. Then he recommends Apple, Samsung and ARM, “all of which we rate as Buys”.
Of course, this all depends on Apple being like a leaf in a stream, its direction out of its control. However, Apple has continually shown it is able to shape markets (remember when tablets were a has-been technical failure?) as well as creating new markets for products people didn’t know they desperately needed.
Don’t cry for Apple just yet.
What do you think?
Has Apple reached the end of the line?